Forces are aligning that could see oil rise back above $80 a barrel

There are increasing signs that a break above $80 for a barrel of oil is now on the cards, after benchmark Brent crude prices closed on Friday night at $72.58 a barrel.

That capped a weekly gain of 7.9%, while West Texas Intermediate (WTI) oil closed at 67.39, which left both measures at their highest level since 2014.

Heightened geo-political tensions have been the main catalyst for the recent price action, and the US-led attack on chemical weapons facilities in Syria over the weekend did nothing to dispel the threat of further conflict in the region.

Markets are also assessing the prospect of a breakdown in the nuclear disarmament deal between the US and Iran, with President Donald Trump pushing for key changes by May 12 which could see the US withdraw from the agreement.

That being said, analysts from Barclays Bank aren’t putting too much weight on the outcome of potential changes to the US-Iran nuclear deal.

“Yes, it should kill the prospects for medium-term oil investment, and yes it could destabilize the region further, but we struggle to accept a narrative that the market had been expecting big gains in Iranian output over the next several years anyway,” Barclays said.

The analysts forecast that geo-politial tensions will keep oil elevated above $70 a barrel through April and May, before prices decline towards $60 a barrel by the end of the year.

Prior to last week’s rally, oil prices were already trending higher, with recent statements from OPEC indicating it’s in no rush to to put a halt to its current round of supply cuts.